Blackberries Are In Season Again

Patent Dispute Settled for $612.5 million

Terry Wright

In 2001, NTP, Inc. (NTP), a patent holding firm based in Virginia, sued Research in Motion, Ltd. (RIM), the Canadian based vendor of the popular Blackberry handheld device, for infringing five of its patents.  The patent that is principally involved is US patent #5,436,960, titled “Electronic mail system with RF communications to mobile processors and method of operation thereof,” which was filed May 20, 1991.   However, there are several other patents involved.  These include patents 5,625,670, 5,819,172, 6,067,451, and 6,317,592.  Each of these other patents share a title that is similar to the original patent and each are considered continuations of the first.  Moreover, all of the patents cover aspects of a system whereby a message that originates in an electronic mail system may be transmitted not only by a wireline but also by radio frequency (RF).  The user can then view the message on his or her mobile RF receiver.
In the first case the United State District Court in Richmond, Virginia found RIM liable for infringement and not only ordered RIM to pay $53.7 million in damages to NTP, but issued an injunction that threatened to shut down the use of the Blackberry network inside the United States.  RMI, however, obtained a stay of execution for the injunction, pending their appeal to the United States Court of Appeals.
On appeal, RIM argued that the patents were not infringed because part of RIM’s system was based in Canada.  The court of appeals, however, rejected that argument and subsequently, in March of 2005, NTP and RIM reached a tentative settlement agreement for $450 million.  The agreement, however, fell through as RIM and NTP were unable to agree on the final terms of the settlement.  Thus, the case once again returned to the courts.
The case did not stay in the courts long though.  In January of 2006, the United States Supreme Court refused to hear RIM’s appeal.  The justices refused to decide whether US patent law was technologically out of date as it applies to the internet.  The Supreme Court’s refusal to hear the appeal thus meant that the original trial judge could impose the original injunction against the Canadian based company and block Blackberry use in the United States.
Consequently, and perhaps in fear of the injunction, RIM announced in March 3, 2006 that it had settled the patent dispute with NTP for $612.5 million in a “full and final settlement of all the claims.”  In their issued statement RIM said that “all terms of the agreement have been finalized and the litigation against RIM has been dismissed by a court order this afternoon. The agreement eliminates the need for any further court proceedings or decisions relating to damages or injunctive relief.”  However, many industry analysts have stated that although the settlement seems large it is in fact on the low side because RIM will not be required to pay any future royalties in the Blackberry technology.
It should be noted though that this low settlement agreement is also in light of the fact that many of NTP’s patents are now receiving rejections by the United States Patent and Trademark Office (USPTO).  On re-examination of many of the NTP patents, involved in the suits, there was concern by the USPTO of recently discovered prior art that had been described in a printed publication over a year before the NTP original patent was filed.  In particular, the USPTO examiners were troubled by a mobile data network utilized by the Norwegian Telecommunications Administration, called Telenor ’89.  NTP, however, has stated that they believed their patents will nevertheless be upheld because the patent examiners, in making the rejections, used an overly broad interpretation of the patents’ specific claims.  Moreover, narrower construction was upheld in the recent infringement suit, and NTP has stated that they are confident that they will be upheld again, if and when the patents reach the federal Appeals Court.